Finding funds for your business can be challenging. However, this doesn’t mean that it’s impossible to get money to start a business, expand or survive the tough times. Here are some ways to fund your business.
Small Business Loans
Banks are reluctant to give money, but you don’t need to worry as you can still get small business loans to fund your venture. Such loans are open to small businesses, but there are some requirements that you need to meet. Understand the requirements set by your lender and prepare the necessary documents for the loan.
When looking for angel investors, you should be concise, have an exit plan and avoid nonsense. Adding experience can also help attract angel investors. A highly experienced adviser on your management team could improve your credibility. It is also important to conduct competitive analysis and market assessments and have a solid sales and marketing plan. Display expert knowledge of your market and discipline to implement and complete your game plan. You should also keep your angels updated on major developments in your company.
Crowd funding sites can be an effective and exciting way to raise funds for ingenious projects. You need to set a goal for the amount of money you want to raise over a certain period of time. Your family, friends and online users use the crowd funding site to pledge money. Project-creators usually provide rewards for pledging like giving a book for pledging $20.
The money you have accumulated in your 401(k) can be used to fund your business. If you follow the right steps, you can use your 401(k) without any penalty. Since the steps are legally complex, working with someone who has experience in building a C corporation is a good idea. Having the right retirement plan can also help. You are investing your retirement funds, so it is important that you are prepared for everything. If things don’t go as planned, you’ll lose both your business and your retirement funds.
Factoring is often used by businesses that are required to fill orders before they get paid or by companies with bad credit. In factoring, the company offers receivables at a low price to get cash quickly. It is, however, an expensive way of raising funds as companies are required to pay a fee that is a fraction of the total amount.
Family and Friends
You can try raising money from your family and friends. Don’t approach them without a formal business plan in place. Provide an evidence-based calculation of when they’ll see their money again and formal financial predictions. Aside from reducing the possibility of nasty surprises, it also allows them to know that you’re taking their money seriously. It is also important consider how the arrangement will be planned. Will the money be a loan or will you offer equity? You also need to tell them the risk involved. Provide a solid business plan, but tell them that there’s a good chance that their investment will be lost.